Citigroup profit plunges 46% as loan defaults loom

NEW YORK: Citigroup Inc reported a 46% plunge in quarterly profit on Wednesday as the bank set aside nearly US$5 billion to prepare for an expected flood of defaults on loans due to a virtual halt in economic activity caused by the coronavirus pandemic.

Citigroup, the most global of the US banks, recorded a US$4.89 billion expense to increase its reserves against anticipated losses on loans, primarily from its credit cards because of the rising unemployment. JPMorgan Chase & Co said on Tuesday its profit plunged by more than two-thirds from a year earlier mostly because of US$7 billion addition to loan loss reserves, half of which were for credit cards.

Citigroup has been leaning on its North America branded cards division to generate the bulk of its consumer banking revenue. The business continued to deliver in the quarter, growing 7% on higher volume.

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